In a real sense, today's bond market weakness was nothing more than a continuation of February's existing trend on steroids.  Multiple asset classes had been moving away from risk into the end of January and have quickly been reversing those positions heading into February.  Bond prices had been doing a great job of maintaining their footing near the top of the recent hill and today's extra strong jobs report gave a big enough short-term push to get bonds rolling uncontrollably.  In the bigger picture though, this snowball still isn't very big.

2015-2-6 combo

(note: Bunds in red, US 10's in yellow, S&P futures in blue, Oil in orange)

If there's a technical saving grace it's that 10yr yields finished the official trading day holding under January 22nd highs at 1.953.  If there's a fundamental saving grace it's that European risks remain, and February's weakness still has a chance to have only been about correcting an overdone rally in January (as opposed to the first steps in a bigger-picture bounce toward higher rates). 

Many traders are currently looking for opportunities to re-enter bond positions after they see enough weakness.  We're already getting into levels where we could start to see that at the beginning of next week.  As such, the first few days will be critical in assessing these technical reentry points.  Mile markers in that regard include 1.95, 1.99, and 2.04 in 10yr yields. 


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.0
102-05 : -0-26
FNMA 3.5
104-31 : -0-17
FNMA 4.0
106-29 : -0-07
Treasuries
2 YR
0.6480 : +0.1240
10 YR
1.9580 : +0.1410
30 YR
2.5310 : +0.1020
Pricing as of 2/6/15 6:12PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
12:59PM  :  ALERT ISSUED: Negative Reprices Now Highly Likely
11:03AM  :  ALERT ISSUED: Another Incremental Increase in Negative Reprice Risk
10:22AM  :  ALERT ISSUED: Negative Reprice Risk Increasing
8:42AM  :  ALERT ISSUED: First Move is Weaker Following NFP

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
John Paul Mulchay  :  "My thoughts for the day...http://mndne.ws/1xCTxs3"
JBARRUTIA12  :  "Makes sense MG thanks! Was just trying to get an idea of locking timeline for those clients on the float boat (their choice)"
Matthew Graham  :  "Personally, I'll be concerned about what I see as a negative technical turn in February until/unless it abates. That could be 1.95 today, or it could require more weakness. Outside possibility that it could keep going."
JBARRUTIA12  :  ""highly liklely" could mean a lot of things if you use " " haha"
JBARRUTIA12  :  "Just trying to digest eveything.....havent read up on all data/info for last 2 days"
Christopher Stevens  :  "only when it comes to having a cocktail Friday evening do I use 'highly likely'"
Matthew Graham  :  "I try not to think of anything in the future as "highly likely" when it comes to markets. "
JBARRUTIA12  :  "MG- with the amount of other things driving the markets, am I way off to think that it is highly likely we could recover this week'"
Matthew Graham  :  "looks like the momentum was in place and NFP gave it a push"
Steve Chizmadia  :  "Snowball effect MG. Stong NFP pushed the ball through the technical gate and momentum took it from there? "
Victor Burek  :  "we been having strong job growth but no wage growth...this could be the beginning of strong wage growth"
Matthew Graham  :  "the moral of the Day Ahead story is that today's weakness doesn't even have to be about NFP. That said, I think NFP was a hugely impressive beat, and it definitely pushed the momentum through technical triggers"
Victor Burek  :  "wage growth probably the bigger factor"
Morgan Hammer  :  "Confused on the NFP number. 257k does not seem like a huge miss from the estimate. Is it the revisions from the previous months that are putting pressure on bonds?"